THE Department of Finance (DoF) said local government units (LGUs) can tap concessional loan programs offered by state-owned banks and the DoF itself, drumming up the possibilities for loan financing of local infrastructure and social programs.
It said in a statement Wednesday that the facilities can finance up to 100% of the total project cost, and include programs offered by Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP).
It said LANDBANK’S Omnibus Term Loan Facility (OTLF) provides funding for qualified LGUs for infrastructure and socio-economic projects listed under the Local Development Plan and Public Investment Program.
According to Finance Secretary Carlos G. Dominguez III, who is also a chairman of LANDBANK, the program reduces transaction costs by doing away with individual approval for each project.
The City of Manila was among the LGUs that availed of the program, taking up a P10 billion line last year to fund the renovation and upgrade of the city’s infrastructure, especially those relevant to health, education and tourism.
Using a prescribed formula, LANDBANK determines the LGU’s net debt service ceiling and its borrowing capacity.
Mr. Dominguez said LGUs can also tap a DBP facility that offers up to 100% financing for priority programs.
The loan size is based on the Estimated Calculated Cost Ranges (ECCR) or the winning bid price, but must not exceed the LGU’s net debt service ceiling and borrowing capacity.
Mr. Dominguez said the LGU’s amortization should not exceed 20% of its internal revenue allotment (IRA) share.
The IRA is the local government’s share of the national government’s revenue.
DBP has financed school buildings, markets, administration offices, multipurpose halls, sports complexes, hospitals, heavy equipment and information technology equipment, among others, he said.
The DoF said LGUs can also access concessional funding and technical assistance from the department’s, Municipal Development Fund Office (MDFO).
According to MDFO’s website, a total of 240 LGUs with 307 subprograms have been approved so far to avail of loans under the financing windows of the Municipal Development Fund-Second Generation Fund (MDF-SGF).
Among the 11 financing windows is the Disaster Management Assistance Fund (DMAF), which LGUs can tap for disaster prevention and mitigation initiatives. A total of 75 LGUs with 97 projects have been approved for the program.
It said the Municipal Development Fund Project (MDFP) has benefited 109 LGUs with 151 subprojects identified as priorities. — Beatrice M. Laforga
